planetrating presentation african microfinance pricing ... · african microfinance pricing...

African Microfinance Pricing Transparency Leadership ForumLeadership Forum

Role of rating agencies

Institutional ratings

Presented by:

Ingrid Smit, Director Sub

[email protected]

Planet Rating

13 rue Dieumegard 93400 Saint-Ouen France

Tél : 33 1 49 21 26 30 – Fax : 33 1 49 21 26 27

[email protected] – www.planetrating.com

[email protected]

6 October 2011

African Microfinance Pricing Transparency

Role of rating agencies /

Institutional ratings

Presented by:

Ingrid Smit, Director Sub-Saharan Africa

[email protected]@planetrating.com

Planet Rating: the global microfinance rating agency

Offices Missions

Paris

Dakar

Lima

6 October 2011

-Planet Rating was established in 1999- More than 700 ratings in 75 countries - Recognized by investors, CGAP, the ADA Rating Initiative and the Rating Fund II

Planet Rating: the global microfinance rating agency

Beirut

Nairobi

Manila

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African Microfinance Pricing Transparency Leadership Forum

Planet Rating was established in 1999More than 700 ratings in 75 countries – 220 in SSARecognized by investors, CGAP, the ADA Rating Initiative

and the Rating Fund II

Planet Rating’s range of services

�Ratings – Institutional (GIRAFE) and Social

� Social rating serves institutions seeking to attract social investors and to measure their social performance

� Interactive Assessments (Institutional and Social)

� Serves small and emerging MFIs with good potential

� Social IA serves MFIs with a social mission but not yet fullytools

� Audits – Portfolio and/or system, due diligence

6 October 2011

� Trainings in GIRAFE and Social Performance

� Introduction to quantitative and qualitative analysis in microfinance

� Intended for microfinance practitioners, Central Banks/regulators, investors/donors

Institutional (GIRAFE) and Social

Social rating serves institutions seeking to attract social investors and to measure their social

Interactive Assessments (Institutional and Social)

Serves small and emerging MFIs with good potential

Social IA serves MFIs with a social mission but not yet fully implemented social performance

Portfolio and/or system, due diligence

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Trainings in GIRAFE and Social Performance

Introduction to quantitative and qualitative analysis in microfinance

Intended for microfinance practitioners, Central Banks/regulators, investors/donors

What is a rating?

Information Chain

« Rating » can be found along the chain of verification and dissemination of information produced by MFIs.

Information Chain

Collect data

Check the data

Compare

6 October 2011

data data

� Microfinance « Rating » =

= operational audit + institutional evaluation + rating.

can be found along the chain of verification and dissemination of information produced by MFIs.

Analyze the institution

Compare Summarize the analysis to

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institution behind the figures

the analysis to calculate a

score

= Institutional Rating

= operational audit + institutional evaluation + rating.

Why evaluate?

For internal purposes (management, board):� Build up self-evaluation capacity� Compare performance to best practices & other MFIs

� Make informed decisions

For external parties (investors, stakeholders):� Report to existing lenders/donors� Attract new sources of funding� Better design/tailor TA

� Access funds or TA

� Make informed decisions

6 October 2011

For the microfinance sector as a whole:� Promote communication /improve access to data� Improve transparency in the sector

� Enhance industry performance and international exposure

For internal purposes (management, board):evaluation capacity

Compare performance to best practices & other MFIs

For external parties (investors, stakeholders):Report to existing lenders/donors

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For the microfinance sector as a whole:Promote communication /improve access to dataImprove transparency in the sector

Enhance industry performance and international exposure

Ratings have played a vital role in professionalizing the microfinance sector, specifically by:

•Promoting international standards of best practices

For regulators, policymakers and networks ratings can help to:

• Increase the information on the performances of national operators – enhancing transparency in the market

•Promoting international standards of best practices•Facilitating MFIs growth and access to funding

•Helping MFIs improve their performances

6 October 2011

operators – enhancing transparency in the market

• Transfer knowledge in microfinance best practices

In addition, rating agencies can offer trainings to MFIs on reporting tools

Ratings have played a vital role in professionalizing the microfinance sector, specifically by:

Promoting international standards of best practices

For regulators, policymakers and networks ratings can help to:

Increase the information on the performances of national enhancing transparency in the market

Promoting international standards of best practicesFacilitating MFIs growth and access to funding

Helping MFIs improve their performances

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enhancing transparency in the market

Transfer knowledge in microfinance best practices

In addition, rating agencies can offer trainings to MFIs on

Institutional Rating

�Assess the mfi’s financial, organizational and operational sustainability

�Analyze the key risks that can affect the performance

Risk Rating for Microfinance Institutions

�Analyze the key risks that can affect the performance

Rating Domains Weight

G overnance 24%

I nformation 10%

R isk management 10%

A ctivities 20%

6 October 2011

A ctivities 20%

F unding and liquidity 14%

E fficiency and profitability 22%

Assess the mfi’s financial, organizational and operational sustainability

Analyze the key risks that can affect the performance

Risk Rating for Microfinance Institutions

Analyze the key risks that can affect the performance

Weight

24%

10%

10%

20%

Qualitative domains

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20%

14%

22%

Quantitative domains

GIRAFE Evaluation Framework

Governance

Information

Decision-making

Planning

Management Team

HR Management

Information

Risk

Activities

Financing

Procedures and Internal Controls

Internal Audit

Financial Services Management

Credit Risk

Credit Risk Coverage

Funding Strategy & Capital Adequacy

Market Risks

6 October 2011

EfficiencyLiquidity Risks

ROA

Revenue Quality

Operational Efficiency

Asset Optimization

making

Management Team

HR Management

Procedures and Internal Controls

Financial Services Management

Credit Risk Coverage

Funding Strategy & Capital Adequacy

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Revenue Quality

Operational Efficiency

Asset Optimization

Contacts

� Global Headquarters

44 rue de Prony

75017 Paris – France

Tel: +33 1 49 21 26 31

Fax: +33 1 49 21 26 27

� Latin America

Francisco de Paula Ugarriza 813 – Oficina 301

Miraflores, Lima 18 – Peru

Tel: +51 1 242 4597

Fax: +51 1 242 4597

6 October 2011

� Asia

444 EDSA 21st floor, Guadelup Viejo

1211 Makati, Manila – Philippines

Tel: +63 907 385 0035

www.planetrating.com -

� Middle East & North Africa

Piccadilly Bldg #407

Hamra Street

Beirut – Lebanon

Tel: +961 1 35 32 10Tel: +961 1 35 32 10

� West Africa & Central Africa

Sokhna Astou Lo Building

4th Floor - Sacre Cœur 2

BP 5695 - Dakar – Sénégal

Tel: + 221 33 825 75 40

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� East Africa & Southern Africa

Cape Office Park – Ring Road

PO Box 16658, 00100 Nairobi – Kenya

Tel: +254 20 386 0525/+254 718 814421

[email protected]

planetrating presentation african microfinance pricing ... · african microfinance pricing...

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